The gem sapphire, says Peregrine Semiconductor, is a network chip's best friend.

The communications chipmaker will announce next week plans to apply its own silicon-on-sapphire technology, currently in wireless and satellite communications chips, to the optical networking market.

The company will make public details on its new Flipped Optoelectric Chip next week at the Optical Fibre Communication Conference in Anaheim, Calif. The new chip will translate light pulses received via a fibre-optic cable into electrical data or vice versa.

The new optical chips, and their associated revenue, become the third leg of the company's business, which also includes wireless chips and communications processors for satellites.

Though Peregrine is more than a decade old, the company is relatively new to the market. But analysts like what they hear so far. "I think the technology applies quite nicely to the areas they are going into," said Stan Bruderle, chief analyst at industry consultants Gartner Dataquest.

Peregrine is "just entering the market, but it's got some interesting technology and I think it has some pretty competent management. I think it knows where it's going and I think it has a pretty compelling story," he said. "But it's just getting started."

Ultimately, the company's goal is to combine the wireless and optical chips with manufacturing prowess to bring Moore's Law to communications chips -- a common refrain among a slew of new networking chip companies. Its goal: Double the performance and reduce the cost of networking chips every 18 months.

"We intend to do for the telecom industry what Intel did for the computing industry," said Ron Reedy, chief technology officer at the San Diego chipmaker.

To support its technology, Peregrine purchased a fabrication plant, located in Sydney, Australia, from Integrated Device Technologies. Plant upgrades, beginning early next year, will move the chips from a 0.5-micron manufacturing process to 0.25-micron next year and 0.13-micron in early 2003.

As Peregrine shrinks the chips in size, they will increase in performance. Peregrine's first-generation optical networking chips, for example, will support speeds of up to 3 gigabits per second. Those speeds are good for data communication technologies, such as Fibre Channel, used in local area networks or storage.

A follow-on optical networking chip, due in 2002, will boast 10-gigabit speeds. As the performance grows, the speed and physical distance at which the chips can transmit and receive data grows.

The company plans 40-gigabit chips for 2003. Meanwhile, its wireless products will grow in performance from 3.5GHz to 7GHz in the same time frame.

Peregrine is shooting to ship the optical chips by the end of the year and is already working with customers, Reedy said.

Peregrine executives say that manufacturing technology is what makes the chips possible.

The trick for the 11-year-old company was designing an error-free way to mate transistors based in silicon to sapphire.

Peregrine employs a silicon-on-sapphire manufacturing process, developed in part by research conducted for the US Navy in a project aimed at developing new chip technologies outside of silicon. Before helping to found Peregrine, for example, Reedy was head of research and development for microelectronics for the Navy in San Diego.

The chips are much more miserly when it comes to power consumption and, as a result, can reach higher frequencies. Or, because of the lower amount of power needed by the transistors to transfer data, the chips can achieve much lower power consumption.

"It turns out sapphire is a widely used industrial-strength mineral. We just order it in 6-inch plates," Reedy said.

The gem offers several advantages over standard silicon, silicon germanium and gallium arsenide-based competitors, he said.

Because sapphire does not absorb energy, the chip's transistors run faster, and at the same time the whole package is more durable and extremely resistant to radiation. This makes the chips acceptable for use in cellular phones or space-faring equipment, such as satellites.

It also allows for much greater integration of devices such as radios for cellular phones, because the overall package consumes less power than if it were manufactured on a different process, such as gallium arsenide, Reedy said.

Peregrine says its chips offer three times the speed but cost only 10 percent to 25 percent more than standard silicon (CMOS) chips.

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